CBIC clarification on 20% ITC restriction on invoices/debit-notes not uploaded by supplier in GSTR-1
The Government has issued Notification 49/2019-Central tax , whereby Rule 36(4) is introduced to restrict of 20% credit of Input Tax credit for non uploaded invoices by Supplier (on the basis of GSTR 2A) Considering the various issues in implementation of the said rule, the CBIC has issued Circular No. 123/42/2019 – GST dated November 11th, 2019 (“the Circular”) which intends to clarify as to how the new sub-rule shall be applied towards calculation of ITC eligible for availment.
Importantly, it has been clarified that:
- This being a new provision, the restriction is not imposed through the common portal and it is the responsibility of the taxpayer that credit is availed in terms of the said rule.
- Therefore, the availment of restricted credit in terms of Rule 36(4) of CGST Rules shall be done on self-assessment basis by the tax payers.
Various issues relating to implementation of the said sub-rule have been examined and the clarification on each of these points is as under: –
ITC restriction under Rule 36(4) is applicable only on the invoices/debit notes on which credit is availed after October 9, 2019.
- Taxpayers may avail full ITC in respect of IGST paid on import, documents issued under RCM, credit received from ISD etc, which are outside the ambit of Section 37(1), if eligibility conditions for availment of ITC are otherwise met.
- Restriction of 20% is to be reckoned as on the due date of filing of returns in FORM GSTR-1 of the suppliers for the said tax period
- Taxpayer may have to ascertain the same from his auto populated FORM GSTR 2A as available on the due date of filing of FORM GSTR-1 under Section 37(1).
- Balance ITC be claimed by the taxpayer in any of the succeeding months provided details of requisite invoices are uploaded by the suppliers.
- Proportionate ITC may be claimed as and when details of some invoices are uploaded by the suppliers provided that credit on invoices, the details of which are not uploaded remains under 20% of the eligible ITC, uploaded by the suppliers.
- Taxpayer may avail full ITC in respect of a tax period, as and when the invoices are uploaded by the suppliers to the extent Eligible ITC/ 1.20
This is explained through an example:
| Sr No. | Particulars | Amount |
| (A) | ITC in Books of Accounts | 10,00,000 |
| (B) | ITC reflected in GSTR-2A | 6,00,000 |
| (C) | ITC not reflected in GSTR-2A (A-B) | 4,00,000 |
| (D) | Eligible ITC (B) | 6,00,000 |
| (E) | 20% of Eligible ITC ( D*20%) | 1,20,000 |
| (F) | Total ITC which we can claim in 3B (D+E) | 7,20,000 |
| (G) | ITC not available, being not reflected in 2A (A-F) | 2,80,000 |
- Pending ITC of (Rs. 2,80,000) can be availed as and when the missing Invoices are reported by the Suppliers on proportionate basis subject i.e. the credit can be claimed subsequently.
- Full ITC can be availed if the below criteria is met for any tax period:
Thus, the moment the ITC as reported by suppliers in GSTR 1 reflecting in GSTR 2A reaches the amount equal to (Total Eligible ITC / 1.2) the Recipient may avail full credit i.e. in the above examples the moment it reaches 8.3 lacs , the recipient may avail full credit.
In succeeding months, we can avail full ITC balance of Rs. 2.8 lakhs in case suppliers upload details of some of the invoices for the tax period involving ITC of Rs. 2.3 lakhs out of invoices involving ITC of Rs. 4 lakhs details of which had not been uploaded by the suppliers. [Rs. 6 lakhs + Rs. 2.3 lakhs = Rs. 8.3 lakhs (10 Lakh/1.2)]
You can refer circular here: Circular No.123/42/2019-GST
Nov 14, 2019 - Blog - Team SSB
